It was a big week for the Seahawks who signed quarterback Russell Wilson to a big contract extension and then locked up linebacker Bobby Wagner to a top market contract. The moves, while expected, have clearly defined the Seahawks strategy of building a star laden roster at certain positions, while sacrificing the second tier players and instead relying on rookies and lower payscale “value” players to make up the roster. While they are not the only team to take this approach (the Packers were a team I specifically discussed in my marginal value analysis at the top of the roster) the Seahawks are now going to blow them, and anyone else, in the NFL away in this regard. So let’s take a quick look at the Seahawks heavy investment in their top talent. Continue reading The Seahawks Superstar Roster Strategy »
With Dez Bryant and Demaryius Thomas joining the $14 million club today, I thought it would be interesting to see how their money breaks down compared to some other players. I think that helps us draw some perspective on the negotiating process and the way various contracts can be used to help constuct a deal acceptable to both sides. So let’s see how things break down for the players/
With Patrick Peterson signing a five year contract extension worth $70 million on Wednesday, the NFL now has officially set the market for the young stud cornerback in the NFL. Peterson marks the third of the big three young corners (Peterson, Richard Sherman, and Joe Haden) to sign a contract which refreshed what had been a stagnant and declining market.
The debate between Peterson and Sherman over who is better has been a hot one over the last two seasons. It was a natural comparison since they play in the same division. Haden was not considered the same level of player, but financially was in the same class as the other two. So in a league where the size of the paycheck often means the perceived worth of the player let’s look put the new contracts in a fair perspective.
Now when we discuss these deals what we are looking at is the new money included in the contract, as each player had at least one year remaining on their contracts when they signed the extensions. By pulling the old money out, which is highly dependent on draft position, we can do our best to compare apples to apples on each deal.
Despite the popular opinion that Sherman had the highest paying contract in the NFL at the position that distinction really belonged to Haden. Haden received more money over the first four years of his contract than Sherman did in his. The difference in annual value is because Haden had to accept a fifth contract year at a lower value while Sherman will be an unrestricted free agent that year.
When Peterson was negotiating his contract there were likely two important concerns to take into account: the yearly cash flows of the Haden contract and the annual value of the Sherman one. His goal was to exceed both, thus making him the highest paid player at the position and justifying his take that he is the best in the NFL. So how do the deals compare in terms of cash flows?
For the most part Peterson will always be about $500,000 higher in his running cash total than Haden until year five, at which point he will increase that by about $2 million. The reason for that increase was the Sherman APY. In order to get a five year annual value to read as larger than Sherman’s he needed a much larger salary than Haden in the fifth year, which he received.
Peterson is a consistently higher earner than Sherman over the comparable time frame (in the range of $1.5 million) and Sherman will need to earn $14 million in the first year of his next extension to match the total Peterson will receive over five years.
The second thing we should look at is guaranteed salary. Each player has a high level of guarantees in his contract, but almost all are of the “injury only” variety, at least initially. An injury only guarantee is one that protects a player from essentially catastrophic injury that prevents him from passing a physical to play in the NFL. While it does bring added security to the contract in most cases it would be rare for a player to collect on future injury guarantees. For the most part each player is protected in a similar manner with a relatively strong signing bonus and guarantees which become fully guaranteed just a few days following the Super Bowl. Considering each player had their contracts essentially guaranteed for 2014 already (none was going to be released) the best way to look at this is to look at the amount of new money paid out in the current year, the only year for each player that is guaranteed.
|Year 0 New Money
|% of Total Contract
Peterson, in this case, actually received the least impressive payout in the signing year of his contract even though it is a higher number than Sherman. Haden received a very impressive figure. In Peterson’s case this is partially because his contract has two “year 0’s”, but for the purposes of guaranteed salary we can not consider that.
One of the metrics that I like to use to identify true earnings in a contract is what I consider the “virtually guaranteed” portion of a contract. This is essentially based on the dead money in a contract that makes it a negative against the salary cap to release a player, something I call “dead money protection”.
This protection is one of the reasons why the early vesting guarantee for Peterson and Sherman is extremely important (I don’t know the specific dates of Hadens guarantees so I cant speak on his). Both players will see a portion of their 2017 become fully guaranteed in 2016 which immediately adds to the dead money in 2017. Because the balance of their 2017 salary becomes guaranteed in February rather than March the teams are blocked from using a June 1 designation to try to minimize some of the salary cap charges.
Prior to any vesting guarantees here are the dead money charges associated with each player’s contract.
|Year 1 Dead
|Year 2 Dead
|Year 3 Dead
|Year 4 Dead
|Year 5 Dead
These numbers all present somewhat of a different story on the contract. Peterson is going to have to play at a much higher level to actually earn the full value of his contract than the other players. Most teams do not like to carry large sums of dead money on their books and with these numbers I would lean towards Haden’s money being well protected through three years, Sherman’s early vesting guarantee of $5 million for Year 3 on his contract should protect his third year salary, while Peterson is really only protected through two extension years.
Of course teams will carry dead money if the actual cash and/or cap savings are significant as that money can get rolled back into the payroll to make a team more competitive . Not counting those vesting guarantees here are the cap plus cash savings associated with a release over the extension years of the contract.
|Year 1 Savings
|Year 2 Savings
|Year 3 Savings
|Year 4 Savings
|Year 5 Savings
I think this table helps illustrate why the backend numbers in most contracts is worthless. If we look at the 4th year for these players, which are all essentially equal, a team would have an option of carrying this player or going out and paying someone $11 million (about half the savings with 50% going to cash and 50% to cap) to play for a year or finding creative ways to fit better talent into the salary cap slot. Again Haden probably got the best deal out of the group while Sherman will need the vesting guarantees to ensure the team has no reason to move on early in the contract.
Peterson, in particular, should be pushing for a contract restructure early in the contract to virtually guarantee himself more money. His best opportunity for that will be in 2015 when he carries a $14.79 million cap charge for a team with a pretty high payroll and no quarterback under contract. If Arizona can get past next season then Peterson will likely never get another string chance for more protection. He simply has to keep up a very high level of play.
Overall I think that the strongest contract of the group is held by Haden. Despite the fact that almost everyone believes he is inferior to the other two he is the one who landed the most protected contract upon signing and has the best opportunity to earn three years salary as long as he is adequate (not great just adequate) on the field. His salary is also right on par with the others until the final year, which is not really likely for anyone to earn if there is any decline in play. There is no arguing that Peterson is the highest paid player, but he has to keep up the highest level of play to match the earnings of the others. The team is holding out more cash for him in the event he does play well, but he is going to have to earn every penny of it.
One last thing that I think is worth noting when discussing the cornerback market is what these contracts do with Darrelle Revis who is older than these players but generally regarded as the best in the NFL. Revis’ true contract value with New England is $12 million as he opted to sign a short term deal that carried a paper value of $16 million a season rather than taking a lower offer. I believe this was a calculated risk by Revis who has always demanded to be the highest paid defender in the NFL, a demand only one team has caved in on and they released him after just one season.
The cornerback market had been stagnant for some time in the $9-10 million region and for Revis to get back to a real contract worth $16 million or more a year would be impossible with the majority of players earning $9 million. Knowing that these three players had the chance to up the market it would give Revis the added leverage he needs to push for the higher contract rather than being stuck on a deal that probably would have paid him around $12-13 million a season for the next five years. Rather than asking for $7 million more a year than a top player he will now be asking for $2-3 million more, which is much more reasonable. That’s a situation that will play out next year, but he now has more ammunition to be seeking Mario Williams money, unless JJ Watt signs a new contract, leading to him asking for Watt money. It’s a story to keep an eye on over the next season.
Today Richard Sherman himself reported that he signed a new contract with the Seattle Seahawks that would keep him in Seattle through 2018. It’s a huge contract, worth $14 million a season, with up to $40 million in guaranteed salary. Thanks to former agent and terrific cap columnist Joel Corry we have the breakdown of the cash flows of the contract which gives us the ability to look at how good a deal this is.
For Sherman this is a great contract. Sherman had little leverage this year to gain an extension and was scheduled to earn just $1.431 million. To make matters worse the cornerback market completely shrunk over the last two seasons with the $16 million Darrelle Revis contract quickly evaporating after just one season and no new players being signed for $10 million a season. Many teams would play hardball in that situation with a non-QB, even if a great player, but Seattle did everything they could to keep their corner happy.
The most recent real contracts at the position that we can compare Sherman’s contract are the Darrelle Revis 2010 contract with the New York Jets and Nnamdi Asomugha 2011 contract with the Philadelphia Eagles. Asomugha signed as a pure free agent while Revis had his rookie contract in essence torn up to make the numbers work such that he would accept the contract. Just for kicks I’ll throw in the crazy three year deal that was signed by Asomugha with the Oakland Raiders in 2009. Here are the cash flows of the contracts:
As you can see this is quite the accomplishment for Sherman. Over a three year period he will be able to nearly match, in terms of new money, the over the top figure the Raiders threw at Asomugha back in 2009. It was a complete head scratcher of a contract and for Sherman to reach to that level is quite impressive, especially if $40 million is truly guaranteed.
For Seattle we can take a slightly different approach to the contract. They knew they were going to do everything they could to keep Sherman in the fold next season. They could have franchised him to limit cash flows but sometimes that can be counter-productive to negotiations. While the $14 million a year new money figure is big to everyone, for Seattle they can view this as a five year contract that they can work in any manner they wish. For this we can also look at Brandon Carr, the highest long term contract currently on the books.
When looked at from the team perspective it’s a bit different. Sherman’s real cash flows trail Revis through three years and he essentially equals Revis’ four year take home salary. Sherman never surpasses Asomugha in this manner and actually trails Carr through two years and is only $2 million above after three. Essentially they can account for Sherman as an $11.5 million a year player by signing him to an extension now rather than playing the market next year when things could change if Patrick Peterson receives a huge extension from the Cardinals.
By making this move now Seattle is also doing some behind the scenes maneuvering which I think is very smart for how they run their organization. Many times the relationship between player representative and team can be very contentious. This was certainly the case in 2010 with Revis when Revis was prepared to sit out a season and was not in the best of shape when he returned. Not surprisingly Revis was dealt away in 2013. You always need to worry about those situations with players especially when the off the field contract talks work their way into on the field performance.
By locking up Sherman and, recently, Safety Earl Thomas to market setting extensions they are diffusing any situations that may arise with good players in the future such as Russell Wilson. Sherman is the first real big extension of the 2011 draft class. Peterson did not get a new deal from the Cardinals. Von Miller can’t get one with Denver. Colin Kaepernick hasn’t signed yet with the 49ers. Thomas is only the second of his draft class to get a big extension. Demaryius Thomas hasn’t received one yet. Jason Pierre-Paul doesn’t seem close to one. Seattle had no problems getting the deals done.
That goes a long way towards a player believing that as long as he maintains a high level of play he will be rewarded at any time with a new contract. It helps keep rookies motivated for their entire four year contract rather than picking and choosing when to make their marks. The team has been very generous with their own talent (in addition to those two they have signed C Max Unger and S Kam Chancellor to nice deals) and has made marks with outside players as well. Both Marshawn Lynch and Michael Bennett received solid deals from the team in recent years after showing good results on what might be termed bargain contracts prior to their new deals. They also paid quite a ransom for Percy Harvin.These moves can make Seattle a choice organization for many free agents. It is not always about top dollar today with Seattle but the potential top dollar that may await tomorrow.
It is no surprise they are sending agents pamphlets about the benefits of undrafted free agents signing with the Seahawks. Seattle needs those players to now balance out these big contracts they are signing, but those players can benefit from playing in Seattle. The Cincinnati Bengals could have extended star LB Vontaze Burfict this year. Maybe they still will but as of now they have not. Burfict was a great UDFA find and the team controls his rights for almost no money in 2014, the high RFA tender in 2015, and a potential franchise tag in 2016. Who knows if that is the route they go, but based on what we have seen in Seattle they would throw their leverage out the window in order to get a deal done that makes both sides happy. UDFA’s will take notice of the way Seattle does business and it may be better to sign there for $1,000 guaranteed than elsewhere for $10,000 guaranteed.
Is this model sustainable for Seattle. Provided they draft well and attract the best UDFA’s it will be. If they whiff badly on a draft class they will begin to feel pressure from their cap. Currently our estimates have Seattle with about $109 million in cap charges committed to 2015 as we enter the draft. They will lose about $5 million to draft picks next year leaving them with $114 million in cap charges for the full roster. That should be enough room to get things done with QB Russell Wilson, who stands to make a fortune from the Seahawks if they continue to be a playoff team, and LT Russell Okung provided that the cap jumps to the $140 million range.
However that is not going to leave the team with a great deal of wiggle room to bring in more expensive outside talent, so they have to draft extremely well and fill the voids with the low cost talent until they recycle out the new veterans in 4 or 5 years and replace them with the players drafted or signed in 2014 through 2017. They should be able to continue to attract reasonably priced free agents as well to try to fit in for a year or two, with those players knowing that they could make a contractual splash in Seattle or elsewhere once their time is up in Seattle. But the draft is critical for the team.
It is definitely an interesting team to watch and to see if the model can lead to sustained success or leads to a crowded salary cap that gets old 3 or 4 years down the line with no reinforcements to keep any window open. But for now Seattle should be doing more than enough to keep most of their talent motivated to repeat and hopefully avoid the Super Bowl hangover that hits many teams.
I had a few comments today about CB Richard Sherman of the Seattle Seahawks and what he could be worth in the future to Seattle, so I thought why not take a look at Sherman and his potential value. Sherman is currently in the 3rd year of a rookie contract signed in 2011 and can be extended following the season, so this is clearly a big year for him.
I think most people universally recognized Sherman as the best cornerback in the NFL last season. I maintain a few different evaluation criteria by which I look at cornerbacks, usually using the raw data from Pro Football Focus. One such evaluation matrix looks at corners in four categories: percent passes caught, QBR against, percent active breakups ((PD + Int)/Tgt), and YAC.
Last season, which was Sherman’s breakout year, he ranked 5th, 2nd, 1st, and 17th among corners with at least 50% playtime. The only other players with three top 10 rankings in the categories were Casey Heyward of the Green Bay Packers, who ranked 2nd, 1st, 2nd, and 62nd, and Antonio Cromartie of the Jets who ranked 3rd, 12th, 7th, and 8th. Here are how the three stack up compared to last years’ league average.
Comparing Sherman and Heyward is a bit difficult (besides defensive scheme differences) because they cover different types of receivers. Heyward plays primarily in the slot, which is a reason why his YAC is so poor. Often when you trail a guy in the slot the player is going to catch the ball running and keep going. Likewise that also can improve the QBR since the formula takes into account things like TD’s which more often than not hit outside targets.
In terms of veteran talent really nobody came close. Players like Champ Bailey and Brandon Flowers were nowhere near these levels and Cortland Finnegan was awful. Of course Darrelle Revis was injured. So in terms of outside play Sherman was the clear cut number 1 corner.
Now Revis’ 2009 season is considered the gold standard of cornerbacks while his work in 2010 and 2011 continued to be excellent once fully recovered from injury. Using Revis’ numbers from 2009 through 2011 we come up with some interesting takeaways comparing the two players.
With the exception of reception rates, Sherman’s 2012 season compares favorably with Revis over the 3 year prime period he had with the Jets. While none of this means Sherman is a better player I think it at least brings up the thought that it is worth looking deeper into the stats to see how they compare.
Another set of stats that I keep are stats that deal with expected versus actual performance. These numbers are based on expected WR performance, which is to be targeted 20.2% of the time on a pass play with an outside catch rater of 58.6% for 14.2 YPC. I also factor in slot play which is 64.9% for 12.6 YPC. Using these numbers I calculate what is called the “Shutdown Stats” which identify how many receptions and yards a player prevents his target from getting in a game.
A second category Team Category which was I considered when Nnamdi Asomugha was playing dreadful in Philadelphia in 2011 when thrown on but he was still rarely being thrown at. This assumes that the corner plays across from an average player and that “shutting down” his opponent doesn’t necessarily lead to an incompletion, just a throw to a different target. This should be a consideration if paying one corner means bringing in below average talent at the other corner spots. Few teams are so dominant with one main WR that it can eliminate the effectiveness of the highly paid cornerback.
Under this set of criteria Sherman falls short of Revis at his peak, though these are still exceptional numbers. The reason for the disparity between Sherman and Revis in the team categories has to do more with the notion of what is typically called a shutdown corner.
Revis is extremely unique in that despite his reputation he got thrown on often, particularly in the 2009 season. In 2009 Revis was targeted nearly 20% of the time he was in coverage. In contrast Asomugha, who was always considered a “shutdown” player, was targeted less than 7% of the time in Oakland. Revis’ numbers were more in line with Sherman’s over the next two seasons. Sherman was targeted 14.6% of the time last season.
So even though he does not match with Revis in this criteria these are still excellent numbers and he has done it for two years in a row. The team yard discrepancy is just a byproduct of being targeted less than Revis and considering the system in Seattle is excellent the numbers are skewed because the secondary targets are all well covered, not all that different from the Revis/Cromartie tandem in NY.
Recent veteran players that have put up numbers like Sherman’s were those who earned big money contracts or were named Franchise Players.
There may be no more difficult market to balance right now than the cornerback market. To say it crashed would be the understatement of the year. Players that many thought could be potentially franchised were signing $4 and $5 million dollar per year contracts. It stands to be seen whether or not this was people like myself simply overvaluing a group of players or if the new spread offenses are convincing teams that overspending on one player is not as important as balance in the secondary. Sherman’s new contract will likely put that in perspective.
At the top of the market is Revis at $16 million a season. Not only is Revis’ contract an outlier but for Revis to get that money, which he was desperate to get as it was extremely important to he and his agents to be the highest paid defensive player, he gave up all guaranteed money. Considering he is coming off an ACL injury that is a very risky move for a player.
If the high end market still exists Sherman will probably work from the contracts given to Brandon Carr, Brandon Flowers and Cortland Finnegan who would be the young player comparables. Also in that upper echelon pay group is Champ Bailey who is significantly older and has more of his money tied in incentives, but because of age I don’t consider Bailey to be a consideration.
In addition I think an important contract to look at is the contract Revis had leading into 2013 with the New York Jets. That contract was specifically designed to be a somewhat “fair market” value contract when an outlier existed. In that case it was Asomugha earning over $16 million a year from the Raiders.
I think the fact that Sherman is on the Seahawks will work to his advantage in setting a price for a few reasons. One is that he is incredibly important to their defense and at its core the Seahawks are a defensive team. He will turn 26 in 2014 and will be entering the prime of career so there should be less concern than there would be with an older player.
But most important is that Sherman has a specific player to point to within the organization as a reason for holding the Seahawks feet to the fire. That player is WR Percy Harvin. With one season left on his contract the Seahawks turned around and gave Harvin, nowhere as accomplished of a player as Sherman, a stunning contract worth nearly $13 million a year. In the past Seattle has also overextended a bit for TE Zach Miller, WR Sidney Rice, and RB Marshawn Lynch.
In general I would say that they are a team that clearly pays for what they believe is future performance rather than relying on past performance as an indicator of worth. So the data points are specifically there with this team to receive a top of the market contract.
Though Sherman is not Revis I think that he should make a strong push for a 3 year payout similar to what Revis received from the Jets. That would shatter the $33 million threshold for the other players. Because Sherman will have one low cost year remaining on his contract, meaning his three year payout can be spread among 4 years, the Seahawks can likely get the cap dollars to work out in his contract moreso than if they wait until after the 2014 season. I don’t know if he can reach the annual value of Revis’ old contract given the market conditions but $11 million a year I think would actually be acceptable to both sides.
Remember that both sides should have a reason to get a deal done this offseason. In the case of the Seahawks a $55 million dollar extension signed next year will really be a 6 year $56.4 million dollar deal for cap purposes, a bargain compared to the contracts that were earned in free agency. It’s the lone justification they had for Harvin’s contract. From Sherman’s perspective not only does he get money up front but he eliminates the Franchise tag from play, which impacts his ability to earn a third contract in his early 30s, and the uncertainty of free agency. Though teams will surely bid high for Sherman will they overbid or will they consider decent players earning $4 or $5 million as a baseline to work from?
The Changing Dynamic of the Seahawks
Seattle, which finally found success in 2012 after years of rebuilding, is now entering a phase where philosophically they may need to make some changes for salary cap purposes. Seattle has been able to be active in free agency and trade market because of having so many quality players on relatively low cost rookie contracts.
The process has already started with extensions given to DE Red Bryant and C Max Unger in 2012 and S Kam Chancellor in 2013. Those were players on 4th, 2nd, and 5th round contracts that are now either top 10 or close to it contracts. Sherman has been paid as a 5th rounder and will now be paid as one of the top players at the position. Also up soon for contracts are S Earl Thomas (FA in 2015), who is going to want more than Chancellor, T Russell Okung (FA in 2016), CB Brandon Browner (FA in 2014), and of course QB Russell Wilson (extension can occur in 2015).
Seattle already has a high payroll in 2014 which will likely be quickly solved by the releases of some combination of veterans such as Rice, Miller, Cliff Avril, and Chris Clemons, whose salary cap numbers will be replaced by the extended players. But once those salaries are replaced by younger home grown Seahawks the ability to jump into free agency and trades may be severely compromised.
As a fan of the Jets I have very closely watched a similar situation play out in New York. It was not long ago that the Jets went to back to back AFC Championship games with a roster that was built through a combination of quality relatively low cost draft picks, trading for rookie contract players and overextending somewhat in free agency. Eventually those low cost players- Revis, Nick Mangold, D’Brickashaw Ferguson, David Harris, Antonio Cromartie, and Santonio Holmes- all became high priced veterans over the course of two offseasons and the whole dynamic changed.
Now the Jets have had other problems beyond those signings, but once you move into major extensions for young talent it leaves you no margin for error. They were unable to bring in other pieces due to long term cap considerations and had no choice but to draft well to replenish the roster with low cost studs. Unfortunately for the Jets their drafts from 2008 thru 2010 proved to be complete disasters. Of 13 players drafted only 1 is currently starting for the Jets (G Vlad Ducasse) and only 3 are on the Jets (Ducasse, CB Kyle Wilson, and QB Mark Sanchez). With the salary cap the way it is it is almost impossible to have success when you have no low cost contributors on the team. It only took two seasons for the Jets to go from Super Bowl contenders to being considered one of the worst teams in the NFL and in part it’s because the team could not fall back on what got them to the dance in terms of trades and free agency because the cap no longer allowed it. At best they could hit the bargain bin for 1 year contracts for “prove it” players like S Laron Landry.
With that in mind the 2012 to 2014 draft classes will be of the utmost importance to the Seahawks. Wilson will be extended early, but almost everyone else could be in a position where they have to play their deals out. You need a high hit rate to make up for all these new contracts that will be hitting the books next season. Turning to free agency for anything more than a stopgap will be difficult. Trading away draft picks will be very difficult. It’s a good situation to have but it’s one that teams have to begin preparing for long before the new deals actually hit the books for the team.